Nice write up today on ESS by Barry from...

Nice write up today on ESS by Barry from livewire

https://www.livewiremarkets.com/wires/spectacular-lithium-hit-sends-patriot-to-970m-and-puts-spotlight-on-50m-neighbour-cygnus

1st September 2022Barry Fitzgerald
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ESSENTIAL METALS (ESS):

The boom conditions for lithium are obviously conducive for companies to achieve some serious value creation as they move discoveries from feasibility studies to final investment decision, and through to eventual development.

And the underpinning discovery doesn’t have to be of a monster size like Pilbara’s Pilgangoora or Liontown’s (LTR) Kathleen Valley in WA, or what is emerging in the James Bay region for that matter.

Core Lithium (CXO) – Australia’s newest lithium miner as it badges itself – is an example. Since making its Finniss discovery in the Northern Territory in 2016 it has weathered the tough times to ride the return of the boom times to build a market cap of $2.4 billion.

First production is planned for the December quarter ahead of a ramp up to annual production of 160,000t of spodumene concentrate over an initial 12-year mine life at a cash cost of $US423/t versus current spot prices of more than $US6,000/t.

There is extension potential to all that as has been reflected in the growth of the Finniss resource to 18.9Mt grading at 1.3% lithium, with exploration upside to boot.

The resource base is the not the biggest around by a long shot. But the point is made that value creation in lithium explorers-cum-producers can be dramatic without having to match the scale of the Tier 1 deposits.

There are others following the same path. Essential Metals (ESS), which last traded at 43.5c for a market cap of $107m, is an example.

The mineral resource at its Pioneer Dome project, 130km south of Kalgoorlie in the Yilgarn South lithium province, currently stands at 11.2Mt grading 1.21% lithium in the North Dome area.

An updated mineral resource is expected in November which will then inform a scoping study which, in turn, will inform more detailed development feasibility studies next year.

So it is all coming with a rush, meaning Essential is in very much in valuation-creation mode beyond where it currently stands. The real move along will come when offtakes are secured. And as we all know, there is a scramble among end-users for future supply needs.